Tuesday, June 30, 2009

The Bank of International Settlements - the "Central Banks' Central Bank" - slammed too big to fail. As summarized by the Financial Times:

The report was particularly scathing in its assessment of governments’ attempts to clean up their banks. “The reluctance of officials to quickly clean up the banks, many of which are now owned in large part by governments, may well delay recovery,” it said, adding that government interventions had ingrained the belief that some banks were too big or too interconnected to fail.

This was dangerous because it reinforced the risks of moral hazard which might lead to an even bigger financial crisis in future.

One China commentator argues that the West is misreading the meaning China's commodity buying spree:

Andy Xie, a Sino-bear and commentator for Caijing, said Western analysts are in for a rude shock if they think that China's surging demand for raw materials implies genuine recovery.

Commodity speculators have been using cheap credit to play the arbitrage spread between futures and spot on the oil markets. They have even found ways to trade lumber to iron ore by sheer scale of leverage. "They've made everything open to speculation," he said.

Mr Xie thinks the spring recovery is an inventory spike, to be followed a double-dip downturn into next year as stimulus wears off.

A key state planning official has signalled a halt to government buying of copper, aluminium and other high-value metals because prices have risen too high.

"We don't anticipate that the country will continue to build its reserves," said Yu Dongming, the head of the metallurgical department of the National Development and Reform Commission...

Zhang Bin, an economist with the Government's most influential advisers, the Chinese Academy of Social Sciences, warned that Beijing was leaning against Chinese speculative buying of a range of commodities including Australia's most lucrative exports, coal and iron ore.

"The commission is acting to reduce pressure on commodities prices and discourage over-production in heavy industry, including guiding steel production and reducing the building of excess capacity," Dr Zhang told the Herald.

"Too much increase in inventories of commodities is not a good thing because the economy is still not that strong and cannot consume this level of imports of iron ore and coal."

Half of the 5.8 trillion yuan (£522bn) of stimulus loans issued by Chinese banks have flowed into the country's stock and property markets, inflating new bubbles, according to senior Communist officials

Fitch Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected.

"With much of the world immersed in crisis, China appears to be one of the few countries where the financial system continues to function largely without a glitch, but Fitch is growing increasingly wary," it said.

"Future losses on stimulus could turn out to be larger than expected, and it is unclear what share the central and/or local governments ultimately will be willing or able to bear."

Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al). This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted".

The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree"

The Chinese banks have avoided writing down bad debt. I should have assumed this would happen, since it is hard to see how it could be avoided, given the nature of the Chinese culture. This is NOT a good idea. It is like pretending that defaults and bad debt simply don’t exist, and this is very bad for the financial sector in the long run.

This is exactly what the Japanese banks have done, and it is partly because of this that their stock markets have imploded over the last 20 years, and their economy has been stagnant for many years...

You have the exact same lethal combination in 1989 Japan as you do now in China: dual bubbles in real estate and stocks (one has imploded), and a decided reluctance to face facts and write down bad debt and defaults.

Absent the money-supply limits which the gold standard imposed on the world, people rightly guess that double-digit inflation would prove rocket-fuel for the bull market in gold. Yet the purchasing power of gold nearly doubled during the Great Depression, and it’s risen four-fold during this decade’s low consumer-price inflation as well.

Why? Because both those periods of low price-inflation saw the money-issuing authorities devalue the currency, first with explicit reference to gold but now without daring to name it. Roosevelt in the mid-30s slashed the dollar’s gold content by 40%; the Greenspan/Bernanke Fed devalued the Dollar again to sidestep a DotCom Depression, keeping real interest rates at less than zero, between 2002-2005.

The maestro’s apprentice applied the same trick in the back-half of 2008, but so far to no avail. And now even the European Central Bank is pumping out money – a near half-trillion euros today alone – in a bid to revive bank lending, swamp the currency markets, and pull Germany out of its first flirt with deflation since the 1930s.

Just such a devaluation – and again, absent any stated reference to gold – was attempted by the Bank of Japan a little less than a decade ago.

Indeed, Japan is the only developed nation since the end of the gold standard to have suffered an extended deflation in prices. So far, at least. Germany and Switzerland look set to try for a re-wind, and unless the dollar can outpace the euro’s descent, we might yet see truly sub-zero inflation in the United States, too.

But whatever that should mean for gold prices, all other things being equal, just doesn’t matter. Because the gold price will not get a chance. All other things are not equal, and the policy solution – rank devaluation – can only make gold more appealing to investors and savers, whether the “monetarist experiment” of TARP, quantitative easing or a half-trillion euros proves successful or not.

Japan’s slump into deflation coincided with the Bank of Japan’s “zero interest rate policy” (ZIRP) at the start of this decade. It also saw the gold price worldwide hit rock-bottom and turn higher, a move that analysts (including us) have typically linked to US monetary moves and investment cash looking for safety as the Dotcom Bubble exploded.

But zero-rate money from the world’s second-largest economy shouldn’t be ignored. And today, zero-rate money is all the developed world has to offer – a trick that might not beat deflation, but might just spur a whole new rush into gold.

In other words, Ash argues that you can't take inflation or deflation in a vacuum. During deflationary periods - like we have now - governments increase the money supply with a flood of new dollars, which is bullish for gold.

I have previously argued that gold may do well during the later stages of deflation:

How would gold perform in a deflationary global recession? Initially gold could come under some pressure as well but once the realization sinks in how messy deflation would be for over-indebted countries and households, its price would likely soar.

Therefore, under both scenarios - stagflation or deflationary recession - gold, gold equities and other precious metals should continue to perform better than financial assets.

Faber's argument is supported by the following charts showing gold's performance as compared to the yen during Japan's "lost decade" of deflation:

After five years in a deflationary economic wilderness, the Bank of Japan switched during the spring of 2001 to a policy of quantitative easing--targeting the growth of the money supply instead of nominal interest rates--in order to engineer a rebound in demand growth.

Look again at the first gold chart for Japan, above.Gold appears to start increasing against the Yen in 2001.

Note: I am not an investment advisor and this should not be taken as investment advice.

Financial writer Karl Denninger is calling for a boycott of all discretionary consumer spending until free market capitalism is restored.

Specifically, Denninger says that we've tried to ask the government and big banks to start acting honestly, but we're just being ignored. The only thing which is both (1) legal and (2) effective is a boycott.

We can all live without a new ipod or big flatscreen tv until our boycott brings results, right?

Denninger provides a specific set of demands:

What are our demands? Here's the list:

All the financial fraudsters are investigated, indicted, and prosecuted. This includes the con artists in CONgress who got "special deals" from Mozilo and his "Friends of Angelo" program (and who are blocking a subpoena to BofA as it would implicate them), it includes those past and current members of Government Sachs, and it includes all those other financial "professionals" who deceived Americans and others with their sale of toxic exploding mortgage products along with the securities supposedly backed by them.

Glass-Steagall is restored, in full, and all the firms that can't exist under it are broken up. Period.

The insider-trading that has become blatant and outrageous is prosecuted where illegal and where not, is made illegal and then prosecuted, with the focus being on the size of the scam. This includes obvious circumstances such as August 2007 (Bernanke's phone logs were FOIA'd) where trading patterns made clear that "certain someones" had foreknowledge of the discount rate cut along with Congresspeople who were briefed on the TARP and within hours or days made significant stock trades. Today if you're Martha Stewart you're prosecuted where if you make millions in an hour by exploiting government information "leaks" the SEC and FBI look the other way.

The Government withdraws all of its backstopping of financial firms who created this mess. All of it. If you're a bank or other firm and did something imprudent, you fail. Period. This is true whether you're a small regional bank (as is happening now; 5 in the last week) or a big behemoth like Citibank or Bank Of America. No "special deals", no "special guarantees", nothing of the kind. If the government wishes to avoid "systemic risk" then the government regulators can do their damn job.

The Fed disgorges all of its improperly-acquired MBS and other related securities. If it doesn't have a full-faith-and-credit guarantee and was bought, it is disgorged - period.

The Fed agrees to full annual audits without exception.

Those people inside government who conspired with certain bankers to cook the books, along with those in the banks who did so, go to jail. Our own Office of The Inspector General in the government has confirmed that there was an active conspiracy to break the law within the OTS, but not one indictment has been issued.

Those who committed fraud in the creation of this economic mess, whether they be mortgage lenders, those who packaged up securities while intentionally omitting credit information, those in the real estate industry to pressed for appraisal fraud and others are investigated, prosecuted and if convicted jailed. All of them.

Losses are born by those who made bad decisions, not the taxpayer generally. Those who made good decisions get to reap the benefits, while those who made bad decisions eat the losses. No exceptions.

Government cuts the annual budget deficit to zero. If government wants to blow the money it has to have the money. If they can't raise the money they don't spend it. It is time to live within our means and hold government to account for its profligate spending along with promises of "benefits" they know they cannot actually deliver down the road such as Medicare Part D.

Monday, June 29, 2009

In a fascinating 22-page studyof money and currency, Christopher Weber shows that every government - from Athens, to pre-collapse Rome, to the Islamic countries in the Middle Ages - which stuck to the Greek standard of coins has been stable and prosperous.

Specifically, the Athenian Drachma contained 65.6 grains of silver. Even after Greece declined as a superpower, its currency remained stable.

The Roman Denarius, Byzantine Bezant, and Islamic Dinar all copied the Drachma, using around 65.6 grains of gold or silver in their coins.

For the many centuries the Romans, Byzantines, and Islamic rulers left this precious metal content alone, they had stable and prosperous money supplies and nations.

But after the Romans and Byzantines started to whittle down the precious metal content of their coins - and after the Muslims started issuing paper money - their currency went down the drain, their prosperity plummeted and their empires collapsed.

This may all sound like ancient history, except that Weber points out that:

The US dollar has been depreciating for generations. Seventy years ago it was first devalued from $20.67 a gold ounce to $35. Then 35 years ago the devaluation started gaining strength. The dollar has lost over 90% of its gold value since August 15, 1971.

History is repeating . . . Sound money is again being trashed, which is causing the collapse of the American empire.

This same thinking applies to the government's lies about Iraq, as more and more evidence proves that the American government knowingly lied when it claimed that Iraq had wmds, and when it claimed there was a link between Iraq and 9/11. The "organized greed" of those in government who wanted to invade Iraq defeated the "disorganized democracy" of everyone else.

If asked, Taibbi might even admit this parallel.

But Taibbi and many other quasi-mainstream writers have a blind spot when it comes to the ultimate example of where "organized greed ... defeats disorganized democracy": false flag operations.

Financial commentator and former broker and options trader Max Keiser is perhaps less shy than Taibbi. As Keiser said of Goldman's manipulation:

This was a controlled demolition sponsored by Goldman Sachs . . .

This is a false flag operation. The American people were scared out of their wits due to the financially engineered financial collapse . . .

Keiser's analogy is, of course, to the "false flag operation" of 9/11 and the "controlled demolition" of the World Trade Centers.

In a false flag operation, the "organized greed" of certain elements within a government and/or its military and intelligence services use fear-inducing attacks to "scare people out of their wits" in order to drum up a sufficiently scary enemy to justify its military and political objectives defeats the disorganized democratic wish for peace, truth and justice.

Those who cling to the official story of 9/11 are like the old people in Russia who cling to their idols and momentos of Communist rule - the photos of Stalin, or handkerchiefs emblazoned with the old Soviet symbol - long after the Russian leaders themselves say that free market capitalism is the way to go:

The Senior Counsel to the 9/11 Commission (John Farmer) - who led the 9/11 staff's inquiry - said "At some level of the government, at some point in time...there was an agreement not to tell the truth about what happened". He also said "I was shocked at how different the truth was from the way it was described .... The tapes told a radically different story from what had been told to us and the public for two years.... This is not spin. This is not true."

The Commission's co-chairs said that the CIA (and likely the White House) "obstructed our investigation"

And given that all of the so-called "confessions" of the alleged 9/11 plotters have turned out to be worthless, it is stunning that people like Taibbi can't admit their assumptions were wrong, and re-examine the evidence anew.

Judges have had to distinguish between real conspiracies and false allegations of conspiracies for hundreds of years, based upon well-established rules of evidence and logic. High-level legal scholars have looked at the evidence and found the government's explanation of the 9/11 conspiracy (solely involving Al Qaeda) to be wanting. I don't know why writers like Taibbi can't do the same in regards to 9/11.

They are insightful intellectuals on some subjects, and like the old Russians fools on others. Perhaps honestly discussing 9/11 is rocking the boat too much even for those journalists who are insightful reporters on other issues.

Liberals often mistakenly assume that only those on the right question 9/11. But in fact, many prominent liberals don't buy the government's story. Likewise, conservatives often assume that only liberals question 9/11, but that is not true.

“To prevent the deficiencies in the main reserve currency, there’s a need to create a new currency that’s delinked from the economies of the issuers,” the People’s Bank of China (PBOC) said in a review of the economy in 2008 released today. In March, the PBOC had urged the IMF to expand operations of its Special Drawing Rights currency (SDRs) and move toward a “super-sovereign reserve currency.”

The PBOC argues that the frequency and intensity of financial crises following the collapse of the Bretton Woods system suggests costs of the dollar-based system may have exceeded its benefits and that that the SDR could take on a key global role.

The PBOC statement comes a day after a top Communist Party research chief said that China should buy gold and U.S. real estate rather than Treasurys.

But as Marc Faber has pointed out, 2 trillion dollars in reserves isn't really that much for a country with as many people as China has. And China long ago signaled that it was gradually moving out of dollars. The signals came in the form of (1) China moving out of long treasuries and into treasuries with a duration of 3 years or less, and (2) China using its reserves to buy commodities, instead of more dollars.

The process that will lead - in the medium-long term - to a challenge of the US dollar as the major global reserve currency has started. The US creditors - the BRICs, the Gulf states and others - are becoming increasingly alarmed that the US will deal with its unsustainable fiscal path via inflation and debasement of the value of the dollar via depreciation. So they will not sit idly waiting for this to happen: they are already diversifying into gold, into resources (as China purchases mines and energy, mineral and commodity resources all over the world).

And the senior economist at the Federal Reserve Bank of Cleveland argued last month:

While SDRs may be declared an official international reserve asset today, they are not likely to become the world’s key international currency anytime soon.

In other words, as explained by Nouriel Roubini, the Fed economist believes that the SDR may be declared the world reserve currency, but the current usefulness of the dollar as a highly liquid, international medium of exchange means that it won't be replaced in the near future as the key unit of international trade.

Would the SDR be a Better Reserve Currency than the Dollar?

Given the IMF's history of imposing draconian, destructive and anti-democratic measures on third world countries, I'm not sure that appointing the IMF as the issuer of the world reserve currency is a great idea.

But to understand the big picture on SDRs, dollars and other potential reserve currencies and mediums of exchange, we have to take a step back and look at what money really is.

It should be remembered that money does not itself have to be a valuable commodity. Obviously, gold is a valuable commodity and can serve as money. And, in many ways, having a gold-backed currency is better than having a fiat currency.

But in its most essential form, currency is solely a way to keep track of the exchange of goods and services. In other words, money is simply a way of keeping tally, a scoreboard, a record keeping system.

As such, money could be pegged to just about anything objective, such as the consumer price index (as long as it included food and energy) or - as China has proposed - a basket of 30 or so commodities.

In fact, there is no need for the U.S. or any other country to cede its sovereignty to a group of international bankers. On the other hand, there is no need for the rest of the world to be beholden to the dictatorial one-sidedness inherent in using the dollar as the world's reserve currency.

Instead, money can be returned to its most minimalist function of being a neutral yardstick to measure goods and services exchanged. In other words, instead of being an instrument of financial warfare and oppression, money can return to its function simply as an objective tally of who owes who what for the good and services they have provided.

A global currency is another proposal - one that creates more problems than it solves. The world "is not one nation or one region," and who's to be boss and in charge. Further, if all governments issued the same currency, "the global money supply (would be) vulnerable to irresponsible governments (issuing) too much." Strong ones would end up dominating the weak, and national sovereignty would be weakened, perhaps ended. A "fully dollarized" world is a prescription for trouble enough to make scarcity "the order of the day."

Rather than one currency, "a single global yardstick" is needed "against which governments can value their currencies - some independent measure (by) which merchants can negotiate their contracts and be sure of getting what they bargained for"...

National currencies "would become what (they) should have been all along - (contracts) or promise(s) to return value in goods and services of a certain worth, as measured against a universally recognized yardstick for determining value."

Friday, June 26, 2009

Remember, the Nobel economist who helped create the pricing formulas for CDS said the CDS are so dangerous that existing over-the-counter contracts should be voided:

The “solution is really to blow up or burn the OTC market, the CDSs and swaps and structured products, and let us start over,” he said, referring to credit-default swaps and other complex securities that are traded off exchanges. “One way to do that, through the auspices of regulators or the banking commissioners, is to try to close all contracts at mid-market prices.”

Many other economists agree.

But in a question and answer session, Geithner said we need CDS for financial "creativity" and "innovation":

Question: During questioning before Congress you were asked why exotic investment instruments like credit default swaps shouldn’t just be done away with. You responded that you did not want to stifle “creativity” in the financial markets. Why do we want a “creative” financial market? – Anonymous

Answer: We want a creative financial market because a creative economy requires it—the innovations generated by our markets and institutions help to make our economy the most vibrant and flexible in the world. The new products, services and capital, they produce are exactly what help turn a new idea into the next big company. Overall, we do not believe that you can build a system based on banning individual products—our core challenge is ensuring we have a system that has a proper balance between innovation on the one hand and consumer protection on the other. We propose keeping the system safe for innovation by having stronger protections against risk in CDS and other derivative markets with stronger capital buffers, greater disclosure so investors and consumers can make more informed financial decisions, and a system that is better able to evolve as innovation advances and the structure of the financial system changes.

Of course, the U.S. economy is not "the most vibrant and flexible in the world". It is the most broke in the world.

But is Geithner right that financial "creativity" and "innovation" are good things?

Paul Krugman writes that banking has to be made boring again, to prevent the kinds of results which came from high -flying finance in the 1920's (the Great Depression) and late 1990s early 2000s (the current melt down). Krugman also notes:

Part of the problem is that boring banking would mean poorer bankers, and the financial industry still has a lot of friends in high places. But it’s also a matter of ideology: Despite everything that has happened, most people in positions of power still associate fancy finance with economic progress.

Indeed, the most "boring" type of banking system imaginable would be to take the power to create credit away from the private banking giants and give it back to the government, as the Founding Fathers originally intended. By abandoning the "creativity" and "innovation" which has allowed the banksters to charge trillions in unnecessary interest fees to the American people bankrupt our nation and drive us into a Depression, we can get back to the "pursuit of happiness" which our forefathers fought and died for and which the Declaration of Independence promises.

Thursday, June 25, 2009

Ali Mohamed ... was something of an al Qaeda super-spy who managed to work with terrorists, the Green Berets, the CIA and become an FBI informant, even while ensuring Osama bin Laden’s safe passage around the middle east. For years, Triple Cross alleges, the FBI and specifically [prosecutor Patrick] Fitzgerald, knew about him but allowed Mohamed’s activities to continue unchecked.

Mohamed ... was actually responsible for writing portions of the terror network’s training manual and played a key role in the bombings of U.S. embassies in Africa which left over 200 dead...

“He believes that chagrin over the fact that bin Laden’s spy stole top-secret intelligence (including, for example, the positions of all Green Beret and SEAL units worldwide) led to a decision on high to bury the entire Able Danger intelligence program, which identified the Al Qaeda cell active in Brooklyn months before the 9/11 attacks, and also identified Ali Mohamed as a member of bin Laden’s inner circle as early as March 2000.”

“In 1996, Fitzgerald and other top officials discredited a treasure trove of al Qaeda-related evidence, including evidence of an active al Qaeda cell operating in NYC five years before 9/11 and of a bin Laden plot to hijack a plane to free Sheikh Omar Abdel Rahman—intelligence considered so important that it was later cited in the infamous Presidential Daily Briefing given to George W. Bush just weeks before 9/11,” noted HarperCollins in a press release.

Mohamed is allegedly still alive today, though his whereabouts is unknown.

Is Lance right that Mohamed tricked the FBI?

Maybe.

But the government has a history of entrapping semi-retarded people who are then labeled as terrorists.

And remember before you make up your mind about Ali Mohamed that the mainstream British paper, the Independent, writes:

There is a concerted strategy to manipulate global perception. And the mass media are operating as its compliant assistants, failing both to resist it and to expose it. The sheer ease with which this machinery has been able to do its work reflects a creeping structural weakness which now afflicts the production of our news.

And that the U.S. government has used black propaganda - for example, forging a letter from al Zarqawi to the "inner circle" of al-Qa'ida's leadership, urging them to accept that the best way to beat US forces in Iraq was effectively to start a civil war.

And as Professor emeritus Peter Dale Scott writes about Ali Mohamed (see original for annotations):

In our book, 9/11 and Empire: Intellectuals Speak Out, I wrote of Ali Mohamed, the close ally of Osama bin Laden and his mentor Ayman al-Zawahiri. It is now generally admitted that Ali Mohamed (known in the al Qaeda camps as Abu Mohamed al Amriki — "Father Mohamed the American") worked for the FBI, the CIA, and U.S. Special Forces. As he later confessed in court, he also aided the terrorist Ayman al-Zawahiri, a co-founder of the Egyptian Islamic Jihad, and by then an aide to bin Laden, when he visited America to raise money.

The 9/11 Report mentioned him, and said that the plotters against the U.S. Embassy in Kenya were “led” (their word) by Ali Mohamed. That’s the Report’s only reference to him, though it’s not all they heard.

Patrick Fitzgerald, U.S. Attorney who negotiated a plea bargain and confession from Ali Mohamed, said this in testimony to the Commission

Ali Mohamed. …. trained most of al Qaeda’s top leadership – including Bin Laden and Zawahiri – and most of al Qaeda’s top trainers. He gave some training to persons who would later carry out the 1993 World Trade Center bombing…. From 1994 until his arrest in 1998, he lived as an American citizen in California, applying for jobs as an FBI translator.

Patrick Fitzgerald knew Ali Mohamed well. In 1994 he had named him as an unindicted co-conspirator in the New York landmarks case, yet allowed him to remain free. This was because, as Fitzgerald knew, Ali Mohamed was an FBI informant, from at least 1993 and maybe 1989. Thus, from 1994 “until his arrest in 1998 [by which time the 9/11 plot was well under way], Mohamed shuttled between California, Afghanistan, Kenya, Somalia and at least a dozen other countries.” Shortly after 9/11, Larry C. Johnson, a former State Department and CIA official, faulted the FBI publicly for using Mohamed as an informant, when it should have recognized that the man was a high-ranking terrorist plotting against the United States.

As I say in our book, in 1993 Ali Mohamed had been detained by the Royal Canadian Mounted Police in Canada, when he inquired at an airport after an incoming al Qaeda terrorist who turned out to be carrying two forged Saudi passports. Mohamed immediately told the RCMP to make a phone call to the United States, and the call secured his release. We’ve since been told that it was Mohamed’s West coast FBI handler, John Zent, “who vouched for Ali and got him released.”

This release enabled Ali to go on to Kenya, take pictures of the U.S. Embassy, and deliver them to bin Laden for the Embassy bombing plot.

In August 2006 there was a National Geographic Special on Ali Mohamed. We can take this as the new official fallback position on Ali Mohamed, because John Cloonan, the FBI agent who worked with Fitzgerald on Mohamed, helped narrate it. I didn’t see the show, but here’s what TV critics said about its contents:

Ali Mohamed manipulated the FBI, CIA and U.S. Army on behalf of Osama bin Laden. Mohamed trained terrorists how to hijack airliners, bomb buildings and assassinate rivals. [D]uring much of this time Mohamed was …, an operative for the CIA and FBI, and a member of the U.S. Army. …Mohamed turned up in FBI surveillance photos as early as 1989, training radical Muslims who would go on to assassinate Jewish militant Meir Kahane and detonate a truck bomb at the World Trade Center. He not only avoided arrest, but managed to become an FBI informant while writing most of the al Qaeda terrorist manual and helping plan attacks on American troops in Somalia and U.S. embassies in Africa.

That Mohamed trained al Qaeda in hijacking planes and wrote most of the al Qaeda terrorist manual is confirmed in a new book by Lawrence Wright, who has seen US Government records. Let me say this again: one of al-Qaeda’s top trainers in terrorism and how to hijack airplanes was an operative for FBI, CIA, and the Army...

Within days of 9/11 Cloonan rushed backed from Yemen and interviewed Ali, whom the Feds had allowed to slip into witness protection, and demanded to know the details of the plot. At that point Ali wrote it all out - including details of how he'd counseled would-be hijackers on how to smuggle box cutters on board aircraft and where to sit, to effect the airline seizures.

If all these latest revelations about Ali Mohamed are true, then:

1) a key planner of the 9/11 plot, and trainer in hijacking, was simultaneously an informant for the FBI.

2) This operative trained the members for all of the chief Islamist attacks inside the United States – the first WTC bombing, the New York landmarks plot, and finally 9/11, as well as the attacks against Americans in Somalia and Kenya.

3) And yet for four years Mohamed was allowed to move in and out of the country as an unindicted conspirator. Then, unlike his trainees, he was allowed to plea-bargain. To this day he may still not have been sentenced for any crime.22...

All three had been trained by Ali Mohamed back in the late 1980s at a rifle range, where the FBI had photographed them, before terminating this surveillance in the fall of 1989.

The U.S. Government was thus in an excellent position to arrest, indict, and convict all of the terrorists involved, including Mohamed...

As a first step, all U.S. agencies should release the full documentary record of their dealings with Ali Mohamed, the FBI and CIA informant who allegedly planned the details of the airline seizures.

Wednesday, June 24, 2009

In the multi-billion dollar herbal supplement market, many claims have been made that the following supplements speed up brain waves:

Essential fatty acids in general

Omega 3 fatty acids (As one article says: "Recall that your brain is comprised of at least 60% fat and the fatty or lipid part of your brain helps to transmit information rapidly across your neural networks".)

Phosphatidylserine, commonly known by the initials "PS"

DHA

And certain types of music - such as certain selections of Mozart - allegedly can speed up your brain waves

But the Utrecht study doesn't just say speed of brain waive propagation is important:

A new study has finally solved the decade-old mystery about where exactly intelligence lies in human brains after scientists found that it's everywhere.

A team at Utrecht University has found that the most efficiently wired brains belong to the most intelligent people -- a finding that suggests that improving this efficiency with drugs could offer a tantalising means of boosting IQ.

According to lead scientist Martijn van den Heuvel, "The concept of a networked brain isn't so different from the transportation grids used by cars and planes.

In other words, it is efficiency in the brain's connectivity which may be the key.

Scientists have also discovered that the Dasm1 protein plays an important part in neural connectivity:

Researchers have discovered a critical protein that regulates the growth and activation of neural connections in the brain. The protein functions in the developing brain, where it controls the sprouting of new connections and stimulates otherwise silent connections among immature neurons, and potentially in the mature brain as well, where it may play a role in memory formation.

Greater brain stimulation promotes an increase in the number of dendrites ("little trees") connecting the billions of cells in the brain. Neurons sprout and re-sprout new dendrites connecting more and more brain cells throughout one's life giving all of us the neuro-physiological wherewithal to learn throughout our entire lifetime.

Multisensory experiences further extend these plentiful and precious connections throughout the entire cerebral cortex and they form additional links with other sub-cortical structures inside the brain. Conversely, reducing the quantity and/or quality of experiences and learning opportunities diminishes the brain's neural pathways permanently decreasing one's ability to learn. However, the human brain is capable of creating trillions of interrelated neural networks rendering our capacity to learn virtually limitless, if the proper foundations are laid early in life during the critical periods of the developing brain.

New neural connections are created as a result of incoming information from at least 19 sensory systems (there are not just five senses)...

While the "power" of a brain can increase in direct relationship to the number of cells composing it, the human brain's capability is best calibrated by the number of connections that develop among its billions of brain cells. Neurons are constantly rearranging their 500 trillion-plus connections (via the dendrites) in response to new information and experiences. UCLA's Arnold Scheibel stated that, "Only when the neuron develops these extensions from itself, does it begin to significantly increase its surface area as a total unit and provide more and more of a ‘landing field' for other incoming neural messages" coming in from active healthy neurons...

Music at sixty beats per minute (Baroque music, Mozart, Bach, Handel, Vivaldi, and others) helps to lower blood pressure and aids in relaxing the body's large muscle groups, which allows for a greater amount of blood flow and blood utilization in the human brain. Although the brain is only 2% of the body's weight, it consumes over 20% of the body's energy, nutrients, and oxygen.

Reducing this vital supply of nutrients and energy to the brain limit its ability to function at its optimal levels. The brain requires an excessively large and disproportionate amount of our blood supply. Unlike other organs and muscles, it cannot store energy. Consequently, a pint and a half or blood must flow through the carotid artery (in the neck) and into the brain single every minute.

You can also play games to increase your brain function (see this, for example).

Exercise also helps keep your brain

You can also play games to increase your brain function (see this, for example).

Moreover, relaxing activities like meditation and prayer have been shown to increase brain mass and connectivity in certain areas of the brain.

Tuesday, June 23, 2009

In 2002, several scientists claimed that bacteria high in Earth's atmosphere came from space.

Last year, scientists said that bacteria in the upper atmosphere may actually make rain. Specifically, they said that bacteria can freeze at fairly warm temperatures, so that the "biological ice nuclei" form condensation nuclei which triggers rain.

Indeed, some scientists have speculated that bacteria cause rain as a means of transportation, so that they will "rain out" from the upper atmosphere to the surface of a planet.

Now, scientists have discovered a "hibernating" bacteria in a salt mine in Utah which they believe has been in suspended animation for 250 million years. There is evidence that this ability to hibernate for long periods of time is also useful for travel through space by the bacteria:

Bacteria have the ability to go into a kind of semi-permanent hibernation, but survival for this long was unheard of. After lying dormant in the salt crystal for 250 million years, the scientists added fresh nutrients and a new salt solution, and the ancient bacteria "re-animated."

Dr. Russell Vreeland, one of the biologists who found the bacteria, pointed out that bacteria can survive the forces [of] acceleration via rubble thrown into space via a meteor impact. If it is possible for a bacteria to survive being [thrown] off the planet and to stay alive within a salt chunk for 250 million years, then in a sort of "reverse-exogenesis" it may be possible that earth's own microbes are already out there.

Indeed, there is a more down-to-earth analogy to the idea of spacefaring bacteria: the humble coconut. Coconuts can float across long distances of water in the ocean, and when they land on a hospitable island, start growing.

Monday, June 22, 2009

A state judge on Thursday ordered former HealthSouth CEO Richard Scrushy to pay nearly $2.9 billion to shareholders who sued over a massive accounting fraud that nearly sent the rehabilitation chain into bankruptcy.

The judgment is very good for America.

Why?

Because the current incentive for high-level corporate people is to commit fraud. Even if they are caught and go to jail, they'll be rich when they get out.

Hitting the crooks in the wallet is the only thing which will motivate people not to rip off their shareholders, the taxpayers and the American treasury.

As Paul Volcker says, the incentive systems at financial firms are broken.

Hitting wrongdoers with big fines will help fix them.

As William K. Black - the senior regulator during the S&L crisis, and an Associate Professor of Economics and Law at the University of Missouri said:

And Nobel prize-winning economist George Akerlof co-wrote a paper in 1993 describing the reasons for financial meltdowns:

Financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses.

In a word, the investors looted. Someone trying to make an honest profit, Professors Akerlof and Romer [co-author and himself a leading expert on economic growth] said, would have operated in a completely different manner. The investors displayed a “total disregard for even the most basic principles of lending,” failing to verify standard information about their borrowers or, in some cases, even to ask for that information.

The investors “acted as if future losses were somebody else’s problem,” the economists wrote. “They were right.”

If enough people like the HealthSouth CEO are hit with multi-billion dollar fines for fraud, future losses will not be somebody else's problems, but their own.

That would make the game of financial fraud a lot less profitable, and so undermine much of the motivation of corporate big-wigs to commit fraud. And - given that Black says that massive fraud is what caused the economic crisis - that in turn would save the taxpayers from having to fund many billions in bailouts . . .

Sunday, June 21, 2009

If there has been any "lesson learned" from the past eight years it is that government officials like Cheney are not to be trusted when they assert something without the support of incontrovertible evidence.

While Giraldi's article was about torture, his point applies to 9/11 as well.

Instead of "incontrovertible evidence" for Cheney's version of 9/11, the 9/11 Commissioners themselves now doubt the "official" 9/11 story:

The Senior Counsel to the 9/11 Commission (John Farmer) - who led the 9/11 staff's inquiry - said "At some level of the government, at some point in time...there was an agreement not to tell the truth about what happened". He also said "I was shocked at how different the truth was from the way it was described .... The tapes told a radically different story from what had been told to us and the public for two years.... This is not spin. This is not true."

The Commission's co-chairs said that the CIA (and likely the White House) "obstructed our investigation"

A decorated 20-year CIA veteran, who Pulitzer-Prize winning investigative reporter Seymour Hersh called "perhaps the best on-the-ground field officer in the Middle East”, and whose astounding career formed the script for the Academy Award winning motion picture Syriana (Robert Baer) said that"the evidence points at" 9/11 having had aspects of being an inside job .

Professor of History and International Relations, University of Maryland. Former Executive Assistant to the Director of the National Security Agency, former military attaché in China, with a 21-year career in U.S. Army Intelligence (Major John M. Newman, PhD, U.S. Army) questions the government's version of the events of 9/11.

For example, several months after 9/11, famed news anchor Dan Rather told the BBC that American reporters were practicing "a form of self-censorship":

"there was a time in South Africa that people would put flaming tires around peoples' necks if they dissented. And in some ways the fear is that you will be necklaced here, you will have a flaming tire of lack of patriotism put around your neck. Now it is that fear that keeps journalists from asking the toughest of the tough questions.... And again, I am humbled to say, I do not except myself from this criticism.

"What we are talking about here - whether one wants to recognise it or not, or call it by its proper name or not - is a form of self-censorship."

Keith Olbermann agreed that there is self-censorship in the American media, and that:

"You can rock the boat, but you can never say that the entire ocean is in trouble .... You cannot say: By the way, there's something wrong with our .... system".

Mainstream-media political journalism is in danger of becoming increasingly irrelevant, but not because of the Internet, or even Comedy Central. The threat comes from inside. It comes from journalists being afraid to do what journalists were put on this green earth to do. . . .

There’s the intense pressure to maintain access to insider sources, even as those sources become ridiculously unrevealing and oversensitive. There’s the fear of being labeled partisan if one’s bullshit-calling isn’t meted out in precisely equal increments along the political spectrum.

If mainstream-media political journalists don’t start calling bullshit more often, then we do risk losing our primacy — if not to the comedians then to the bloggers.

I still believe that no one is fundamentally more capable of first-rate bullshit-calling than a well-informed beat reporter - whatever their beat. We just need to get the editors, or the corporate culture, or the self-censorship – or whatever it is – out of the way.

And Air Force Colonel and key Pentagon official Karen Kwiatkowski wrote:

I have been told by reporters that they will not report their own insights or contrary evaluations of the official 9/11 story, because to question the government story about 9/11 is to question the very foundations of our entire modern belief system regarding our government, our country, and our way of life. To be charged with questioning these foundations is far more serious than being labeled a disgruntled conspiracy nut or anti-government traitor, or even being sidelined or marginalized within an academic, government service, or literary career. To question the official 9/11 story is simply and fundamentally revolutionary. In this way, of course, questioning the official story is also simply and fundamentally American.

(page 26).

2. Censorship by Higher-Ups

If journalists do want to speak out about an issue, they also are subject to tremendous pressure by their editors or producers to kill the story.The Pulitzer prize-winning reporter who uncovered the Iraq prison torture scandal and the Mai Lai massacre in Vietnam, Seymour Hersh, said:

"All of the institutions we thought would protect us -- particularly the press, but also the military, the bureaucracy, the Congress -- they have failed. The courts . . . the jury's not in yet on the courts. So all the things that we expect would normally carry us through didn't. The biggest failure, I would argue, is the press, because that's the most glaring....

Q: What can be done to fix the (media) situation?

[Long pause] You'd have to fire or execute ninety percent of the editors and executives. You'd actually have to start promoting people from the newsrooms to be editors who you didn't think you could control. And they're not going to do that."

In addition, the government has allowed tremendous consolidation in ownership of the airwaves during the past decade. The large media players stand to gain billions of dollars in profits if the Obama administration continues to allow monopoly ownership of the airwaves by a handful of players. The media giants know who butters their bread. So there is a spoken or tacit agreement: if the media cover the administration in a favorable light, the MSM will continue to be the receiver of the government's goodies.

3. Drumming Up Support for War

In addition, the owners of American media companies have long actively played a part in drumming up support for war.

It is painfully obvious that the large news outlets studiously avoided any real criticism of the government's claims in the run up to the Iraq war. It is painfully obvious that the large American media companies acted as lapdogs and stenographers for the government's war agenda.

Veteran reporter Bill Moyers criticized the corporate media for parroting the obviously false link between 9/11 and Iraq (and the false claims that Iraq possessed WMDs) which the administration made in the run up to the Iraq war, and concluded that the false information was not challenged because:

"the [mainstream] media had been cheerleaders for the White House from the beginning and were simply continuing to rally the public behind the President — no questions asked."

And as NBC News' David Gregory (later promoted to host Meet the Press) said:

"I think there are a lot of critics who think that . . . . if we did not stand up [in the run-up to the war] and say 'this is bogus, and you're a liar, and why are you doing this,' that we didn't do our job. I respectfully disagree. It's not our role"

But this is nothing new. In fact, the large media companies have drummed up support for all previous wars.

The mainstream media also may have played footsie with the U.S. government right before Pearl Harbor. Specifically, a highly-praised historian (Bob Stineet) argues that the Army’s Chief of Staff informed the Washington bureau chiefs of the major newspapers and magazines of the impending Pearl Harbor attack BEFORE IT OCCURRED, and swore them to an oath of secrecy, which the media honored (page 361) .

And the military-media alliance has continued without a break (as a highly-respected journalist says, "viewers may be taken aback to see the grotesque extent to which US presidents and American news media have jointly shouldered key propaganda chores for war launches during the last five decades.")

There is a concerted strategy to manipulate global perception. And the mass media are operating as its compliant assistants, failing both to resist it and to expose it. The sheer ease with which this machinery has been able to do its work reflects a creeping structural weakness which now afflicts the production of our news.

The article in the Independent discusses the use of "black propaganda" by the U.S. government, which is then parroted by the media without analysis; for example, the government forged a letter from al Zarqawi to the "inner circle" of al-Qa'ida's leadership, urging them to accept that the best way to beat US forces in Iraq was effectively to start a civil war, which was then publicized without question by the media..

So why has the American press has consistenly served the elites in disseminating their false justifications for war?

One of of the reasons is because the large media companies are owned by those who support the militarist agenda or even directly profit from war and terror (for example, NBC is owned by General Electric, one of the largest defense contractors in the world -- which directly profits from war, terrorism and chaos).

Another seems to be an unspoken rule that the media will not criticize the government's imperial war agenda.

And the media support isn't just for war: it is also for various other shenanigans by the powerful. For example, a BBC documentarysdocuments:

There was "a planned coup in the USA in 1933 by a group of right-wing American businessmen . . . . The coup was aimed at toppling President Franklin D Roosevelt with the help of half-a-million war veterans. The plotters, who were alleged to involve some of the most famous families in America, (owners of Heinz, Birds Eye, Goodtea, Maxwell Hse & George Bush’s Grandfather, Prescott) believed that their country should adopt the policies of Hitler and Mussolini to beat the great depression."

Have you ever heard of this scheme before? It was certainly a very large one. And if the conspirators controlled the newspapers then, how much worse is it today with media consolidation?

4. Censorship by the Government

Finally, as if the media's own interest in promoting war is not strong enough, the government has exerted tremendous pressure on the media to report things a certain way. Indeed, at times the government has thrown media owners and reporters in jail if they've been too critical. The media companies have felt great pressure from the government to kill any real questioning of the endless wars.

For example, Dan Rather said, regarding American media, "What you have is a miniature version of what you have in totalitarian states".

Indeed, former military analyst and famed Pentagon Papers whistleblower Daniel Ellsberg said that the government has ordered the media not to cover 9/11:

Ellsberg seemed hardly surprised that today's American mainstream broadcast media has so far failed to take [former FBI translator and 9/11 whistleblower Sibel] Edmonds up on her offer, despite the blockbuster nature of her allegations [which Ellsberg calls "far more explosive than the Pentagon Papers"].

As Edmonds has also alluded, Ellsberg pointed to the New York Times, who "sat on the NSA spying story for over a year" when they "could have put it out before the 2004 election, which might have changed the outcome."

"There will be phone calls going out to the media saying 'don't even think of touching it, you will be prosecuted for violating national security,'" he told us.

* * *

"I am confident that there is conversation inside the Government as to 'How do we deal with Sibel?'" contends Ellsberg. "The first line of defense is to ensure that she doesn't get into the media. I think any outlet that thought of using her materials would go to to the government and they would be told 'don't touch this . . . .'"

We cannot just leave governance to our "leaders", as "The price of freedom is eternal vigilance" (Jefferson). Similarly, we cannot leave news to the corporate media. We need to "be the media" ourselves.

"To stand in silence when they should be protesting makes cowards out of men."- Abraham Lincoln

"Our lives begin to end the day we become silent about things that matter."- Dr. Martin Luther King Jr.

"Powerlessness and silence go together. We...should use our privileged positions not as a shelter from the world's reality, but as a platform from which to speak. A voice is a gift. It should be cherished and used."– Margaret Atwood

"There is no act too small, no act too bold. The history of social change is the history of millions of actions, small and large, coming together at points in history and creating a power that [nothing] cannot suppress."- Howard Zinn (historian)

"All tyranny needs to gain a foothold is for people of good conscience to remain silent"- Thomas Jefferson

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